Subprime auto lender and semi-annual issuer in the private term markets, Long Beach Holdings Corp., is planning an initial public offering in the near future that will lead to the company's entrance into the public arena, sources said. The Paramus, N.J.-based firm is not to be confused with Washington Mutual unit Long Beach Mortgage, although the two are both former subsidiaries of AmeriQuest that were divested.
The IPO, led by Friedman Billings Ramsey, will raise $110 million for the firm, according to the offerings shelf registration statement filed Oct. 18 with the Securities & Exchange Commission. Long Beach typically securitizes up to $400 million a year in the private fixed-income markets. Last week Long Beach sold $189 million of auto paper privately via Greenwich Capital Markets.
Long Beach is an independent auto finance company that underwrites, purchases and services auto loans generally made to "consumers who are generally unable to obtain financing through traditional sources," according to the filing. Long Beach groups customers into three categories: near-prime, non-prime and sub-prime.
The company underwent a major corporate restructuring from December 1997 that lasted through 1999 and entailed the assembly of a new management team, consolidating its staff and a revamping of its loan underwriting policies. As a result, the company reports, "we have experienced a substantial improvement in our automobile loan performance and profitability."
Franchised dealership participation increased to 94% from just 67% prior to the restructuring and 30-day gross delinquencies in the portfolio decreased to 3.3% from 10.4%, the filing states. Long Beach has regional offices located in Northern and Southern California, Illinois, Massachusetts, New Jersey, Texas and Virginia.
The company will trade publicly on the Nasdaq exchange under the proposed ticker LBHC.